Gold & Silver Daily

Ed's Critical Reads

Jan 27, 2015

16 firms worth billions despite losing money

Thanks to a new round of funding, the music app is now part of a growing list of technology companies that investors believe are worth at least $1 billion even though they're unprofitable.

While making money may not be the most important factor for young companies, the lofty price tag placed on businesses stuck in the red is raising some eyebrows.

"Markets are not necessarily rationale. This may almost be like a fever," said Roger Kay, a tech analyst at Endpoint Technologies.

It's yet another consequence of extremely easy money from central banks: Investors have little choice but to make riskier and riskier bets.

That's exactly right, dear reader. This article appeared on the Internet site on Friday morning EST---and I thank reader U.D. for passing it around on Saturday.

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U.S. Housing-Market Headwinds Are Impeding Recovery: Gary Shilling

U.S. housing activity remains weak despite six years of federal government aid, strong interest from overseas buyers, rock-bottom interest rates and massive purchases of mortgage bonds by the Federal Reserve.

Does this mean housing may never spring back to its pre-recession levels? Many signs point to yes. 

Don't blame the Chinese, who are showing an abundance of interest. Their share of foreign purchases leaped to 16 percent in the year ending March 2014, from 5 percent in 2007.

They paid a median price of $523,148, higher than any other nationality and more than double the $199,575 median price of all houses sold.

This item showed up on the Internet site last Friday as well---and it's courtesy of West Virginia reader Elliot Simon.

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Marc Faber Says He Likes Gold, `Some Emerging Economies'

This 2:40 minute Bloomberg video clip appeared on their website yesterday I guess, as there's no dateline on the web page.  I thank reader Ken Hurt for sending it along.

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Mark Carney warns of liquidity storm as global currency system turns upside down

The Governor of the Bank of England has warned markets to brace for possible trouble in 2015 as the US Federal Reserve tightens monetary policy and liquidity evaporates, fearing that the new financial order has yet to face its first real test.

Mark Carney said diverging monetary policies in the US, Britain, Europe, and Japan may set off further currency turbulence and "test capital flows across the global economy, including to emerging markets."

It is the latest sign that officials at Threadneedle Street are worried about the global fall-out from the rising dollar, which poses a mounting threat to companies in the developing world that have borrowed up to $9 trillion in US dollars.

Mr Carney said regulators have cleaned up the banks and tried to prepare for the tectonic shift taking place in the international currency structure but major risks remain.

This story put in an appearance on the Internet site late on Saturday afternoon GMT---and it's the first contribution of the day from South African reader B.V.

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Germans united in the conviction ECB has gone rogue

While Saudi Arabia lamented the passing of King Abdullah yesterday, Germany was busy burying its last illusions about the European Central Bank.

After a long and valiant struggle, German hopes were finally extinguished that the ECB would change its monetary mind and come back to the Bundesbank way of thinking.

The majority decision by the ECB governing council to buy €1.14 trillion in sovereign bonds has been a a slap in the face for the German establishment.

Lead by the Bundesbank, Germany’s political, media and business leaders had insisted they saw no looming deflationary threat to justify bond-buying. When the ECB proceeded anyway, they dismissed it as “Draghi doping” of weak euro economies.

This right-on-the-money story showed up on the Internet site in the wee hours of Saturday morning GMT---and it's the second article in a row from reader B.V.

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Europe’s Saddest Day in 50 Years: Another Trillion For the Banks, More Trauma For the People

I was going to start out saying yesterday was the saddest day in Europe in 50 years, or something like that, because of the insane and completely nonsensical largesse the ECB permits itself to launch, aimed at once again saving a banking system, but which will not only not help the European people, it will make things even much worse than they already are. Which is also, lest we overlook that ‘detail’, entirely thanks to the ECB/EU/IMF Troika,

I’ve said many times that the EU in its present form should be dismantled tomorrow morning (even though it’s not the same tomorrow morning anymore), and if Draghi’s $1.1 million x million ‘stimulus’ should make anything clear, it’s that the dismantling gets more urgent by the day.

But calling it the saddest day in Europe in 50 years would show far too little respect for the people who died in former Yugoslavia, and in eastern Ukraine. It’s still a very sad day, though. And I was already thinking about that even before I read Theopi Skarlatos’ article for the BBC; that really made me want to cry.

This interesting guest commentary appeared on David Stockman's website on Sunday---and it's the first offering of the day from Roy Stephens.

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Doug Noland: Draghi's Do Whatever it Takes Beats Estimates

As always, the CBB is expression of my own views. It is in no way intended as investment advice. My objective is to chronicle history's greatest Credit Bubble and hopefully add some insight along the way.

Let’s return to where we left off in late-December: “Bubble On, Bubble Off.” The thesis remains that the “global government finance Bubble” was pierced in 2014. However, in a world of unprecedented liquidity excess, deflating Bubbles at the “Periphery” further inflate Bubbles at the “Core.” Last year saw faltering Bubbles in the Emerging Markets (EM) and commodities usher in a new King Dollar reign. While the Fed wound down QE, extraordinary measures by the likes of Draghi and Kuroda safeguard the historic boom in global leveraged speculation. Hot money flooded into U.S. securities markets. These trends run unabated in early-2015.

I’m also not backing away from the view that a prolonged experiment in global monetary inflation is “failing spectacularly”. The stakes are just incredibly high – financial, economic, social, geopolitical… Global policymakers refuse to admit their failings. They will not accept the obvious: printing “money” – creating perceived wealth through electronic debit and Credit entries – will not rectify the world’s ills. Indeed, runaway financial Bubbles lie at the heart of an extraordinary array of worsening global maladies. Disastrously, key central banks have coalesced into the stand that monetary measures have not been aggressive enough.

After being M.I.A. for a month, Doug is back in the saddle, but now on his own website  As always, his commentaries are must reads---and this one is no exception.  I thank Dan Lazicki for tracking Doug down for us.

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E.U. Fears TTIF Free Trade Agreement Could Spur Litigation

When Bernd Lange talks about the advantages of a free trade agreement with the U.S., he often cites the example of the VW bus. The hippy favorite has been the target of a 25 percent tariff since 1964, a punitive move after the European Economic Community raised levies on imported chicken, shutting the Americans out of the market. Sales have been hampered for decades as a result. But if the levy were significantly reduced, its price tag would plunge.

Lange is a classic car enthusiast -- and the chair of the European Parliament Committee on International Trade, which focuses on the Transatlantic Trade and Investment Partnership (TTIP) treaty. But despite the possible benefits for Volkswagen, the Social Democrat has had little choice but to emphasize the negative aspects of TTIP during his public appearances. In Europe's leading exporting nation, broad swathes of the population are opposed to the free trade agreement. You can even find anti-TTIP flyers in many churches.

The main sticking point is special rights given to investors, who would be able to challenge countries in special international dispute settlement panels that bypass national courts. It's a pill that even those who believe in the deal are having difficulty swallowing. Some 145,000 European citizens voiced their disapproval in a "public consultation" undertaken by the European Commission, with many expressing fear that U.S. companies might seek to overturn E.U. laws on genetic engineering, environmental protection and food quality.

This news story was posted on the German website at 4:22 p.m. Europe time on their Monday afternoon---and it's definitely worth reading.  I thank Roy Stephens for sending it.  By the way, the thought police over at the website changed the headline to read "Free Trade Faults: Europeans Fear Wave of Litigation from U.S. Firms".

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The Elections in Greece---and the Fall Out: Nine stories

1. Greek radical left wins election, threatening market turmoil:  2. Alexis Tsipras - Troika Belongs in the Past:  3. Greece's New FinMin Warns "We Are Going To Destroy The Greek Oligarchy System" : Zero Hedge  4. Yanis Varoufakis: Greece's future finance minister is no extremist: The Telegraph  5. Greece elections: Merkel has lost, hope has won: Russia Today  6. Far-Left Syriza Victory in Greece - Bruises European Markets: Reuters  7. IMF's Lagarde rules out special treatment for Greece: Reuters/Yahoo  8. Greek vote could be only the beginning for debtor states seeking a euro-exit: The Telegraph  9. Syriza’s victory: this is what the politics of hope looks like: The Guardian

Note: There's been a headline change and rewrite of story #6.  It now reads "Euro bounces back, global stocks up after Greek vote".

[The above stories are courtesy of Brian Farmer, our man in Greece---Harry Grant, South African reader B.V., Roy Stephens---and Dennis Mong]

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Red Alert: Rocket Fire Could Signal New Offensive on Mariupol

Reports of heavy rocket artillery firing on the eastern parts of the city of Mariupol, Ukraine, as well as a statement made by a separatist leader, indicate the potential preparation of an offensive on the city. While this would be a significant escalation and an indicator of Russian intent to push further into Ukraine, potentially forming a much-rumored land connection to the northern border of Crimea, there are also several indicators required for such an offensive that are currently still missing.

The heavy rocket artillery firing has been widely reported, and the death toll has risen to 27. Mariupol has been shelled in the past, notably in early September, but as the cease-fire took effect, separatist forces generally conducted attacks only outside of the city. It is not clear whether this is simply an intensification of relatively static fighting along the front between Russian and pro-Russian forces on the one side, and Ukrainians, or the beginning of a Russian-led offensive to widen the pocket, or the opening move in a broader strategic offensive to link up with Crimea, 200 miles to the west of the pocket.

The widespread use of Grad Multiple Launch Rocket Systems indicates that this is a planned action with significant logistical support that involves extensive use of Russian troops, though Grad fire has been widely used throughout the conflict. There have been indications that Russian forces, including Russian Marines, have moved into the eastern Ukraine pocket controlled by pro-Russian forces, giving the Russians offensive options. Heavy artillery preparations frequently precede Russian attacks, particularly by concentrated MLRS attack. Given the amount of munitions needed to supply concentrated fire, the Russians tend not to use them casually. The presence of Grad missiles indicates the possibility of artillery preparation for a broader offensive.

I'm sure the attacks are real, but I'm always suspicious of anything that comes off the Internet site---and you should be as well.  This news item appeared there on Saturday.  It's courtesy of Roy Stephens.

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Kiev introduces state of emergency in Donbass, high alert across Ukraine

The Ukrainian government has introduced the state of emergency in the war-torn south-eastern Donetsk and Lugansk Regions, and put all other territories on high alert, Prime Minister Arseny Yatsenyuk announced.

"In accordance with the Ukrainian Code of Civil Protection, the Cabinet of Ministers has adopted a decision to recognize an emergency situation at a state level. The Ukrainian government has decided to impose the state of emergency in the Donetsk and Lugansk Regions," Yatsenyuk is cited as saying by Interfax-Ukraine.

According to the PM, the move is aimed at providing the most efficient coordination of all government agencies in order to ensure civil protection and the safety of the population.

The statement was made after the field meeting of the Cabinet of Ministers, which took place at the headquarters of the State Emergency Service of Ukraine in Kiev on Monday.

This story showed up on the Russia Today Internet site at 1:03 p.m. Moscow time on their Monday afternoon, which was 5:03 a.m. EST.  It's also courtesy of Roy Stephens.

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Ukraine crisis: Angela Merkel 'offers Russia free trade deal for peace'

Angela Merkel has reportedly offered Russia negotiations on a free trade agreement with the E.U. in exchange for a peace deal in Ukraine.

The German chancellor made the offer at the World Economic Forum in Davos, where she spoke of a free trade area “from Lisbon to Vladivostok”, according to a report in Süddeutsche Zeitung newspaper.

Mrs Merkel said Germany was “ready” to discuss “possibilities of cooperation in a common trade areas”. But she made it clear talks could not start until Russia abides by the Minsk Agreement, the ceasefire agreed in September, which it has so far failed to honour.

Mrs Merkel's vice-chancellor, Sigmar Gabriel, who was also in Davos, spelt out the offer more clearly. “The next step is to discuss a free trade zone,” he said. “We should offer Russia a way out.”

This story appeared on The Telegraph's website on Friday afternoon GMT---and Bill Busser sent it our way on Sunday morning.

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S&P downgrades Russia's sovereign credit rating to below investment grade

Ratings agency S&P said on Monday it had cut Russia's sovereign credit rating to BB+ or below investment grade.

S&P warned in late December that it could deprive Russia of its investment-grade credit rating as soon as mid-January, following a rapid deterioration of the country's monetary flexibility and a weakening economy.

This Reuters piece, filed from Moscow, showed up on their website [via] late on Monday morning EST---and I thank Elliot Simon for sharing it with us.

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Outdoing Dr. Goebbels: The propaganda war against Russia Today

Propaganda. At its best – a wonderful German pop group of the 1980s who had their biggest hit with a track named ‘Duel’. At its worst – the comments of the new BBG chief Andrew Lack, which put RT in the same category of ‘challenges’ as ISIS.

“We are extremely outraged that the new head of the BBG [U.S. Broadcasting Board of Governors] mentions RT in the same breath as world’s number one terrorist army. We see this as an international scandal and demand an explanation,” says Margarita Simonyan, RT’s editor-in-chief. Anyone who supports genuine pluralism in the international media should be demanding an explanation too.

It would be easy to say that Dr. Joseph Goebbels, the infamous Nazi Minister of Propaganda would be proud of Lack’s comments. But in fact the propaganda war against RT – of which Lack’s comments are only the latest example, actually – ‘out-Goebbels’ Dr Goebbels’.

The reason for these attacks is fear. What is clear is that the success of RT has caused real panic in the ranks of the west’s neo-con/‘liberal interventionist’ elite.

This must read op-edge piece appeared on the Russia Today website early Sunday afternoon Moscow time---and it's another offering from Roy Stephens.

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Iran moves away from U.S. dollar in foreign trade

Iran is stopping mutual settlements in dollars with foreign countries and agreements on bilateral swap in new currencies will be signed in the near future, the Central Bank of Iran (CBI) has said.

“In trade exchanges with foreign countries, Iran uses other currencies, including Chinese yuan, euro, Turkish lira, Russian ruble and South Korean won,” Gholamali Kamyab, CBI deputy head, told the Tasnim state news agency.

He added that Iran is considering the possibility of signing bilateral monetary agreements with several countries on the use of other currencies.

This Russia Today article put in an appearance on their Internet site on Saturday afternoon Moscow time---and I thank International Man's senior editor Nick Giambruno for passing it around.

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Germany halts arms exports to Saudi Arabia

Germany has decided to stop arms exports to Saudi Arabia because of "instability in the region," German daily Bild reported on Sunday.

Weapons orders from Saudi Arabia have either been "rejected, pure and simple," or deferred for further consideration, the newspaper said, adding that the information has not been officially confirmed.

The decision was taken on Wednesday by the national security council, a government body that includes Chancellor Angela Merkel, Vice Chancellor Sigmar Gabriel and seven other ministers, it said.

"According to government sources, the situation in the region is too unstable to ship arms there," added the daily.

This AFP story, filed from Berlin, showed up on the Internet site on Saturday Europe time---and I thank South African reader B.V. for his final contribution to today's column.

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A Saudi Palace Coup

King Abdullah's writ lasted all of 12 hours. Within that period the Sudairis, a rich and politically powerful clan within the House of Saud, which had been weakened by the late king, burst back into prominence. They produced a palace coup in all but name.

Salman moved swiftly to undo the work of his half-brother. He decided not to change his crown prince Megren, who was picked by King Abdullah for him, but he may choose to deal with him later. However, he swiftly appointed another leading figure from the Sudairi clan. Mohammed Bin Nayef, the interior minister is to be his deputy crown prince. It is no secret that Abdullah wanted his son Meteb for that position, but now he is out.

More significantly, Salman, himself a Sudairi, attempted to secure the second generation by giving his 35- year old son Mohammed the powerful fiefdom of the defense ministry. The second post Mohammed got was arguably more important. He is now general secretary of the Royal Court. All these changes were announced before Abdullah was even buried.

The general secretaryship was the position held by the Cardinal Richelieu of Abdullah's royal court, Khalid al-Tuwaijri. It was a lucrative business handed down from father to son and started by Abdul Aziz al Tuwaijri. The Tuwaijris became the king's gatekeepers and no royal audience could be held without their permission, involvement, or knowledge. Tuwaijri was the key player in foreign intrigues -- to subvert the Egyptian revolution, to send in the troops to crush the uprising in Bahrain, to finance ISIL in Syria in the early stages of the civil war along his previous ally Prince Bandar bin Sultan.

This short essay, which is worth reading, appeared on the Internet site on Friday morning EST---and I thank reader Vince Koloski for finding it for us.

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King Abdullah: Medieval Reactionary, Brutal Despot, Incessant Warmonger

After nearly 20 years as de facto ruler of the Kingdom of Saudi Arabia, King Abdullah ibn-Abdulaziz al-Saud died last night at the age of 90. Abdullah, who took power after his predecessor King Fahd suffered a stroke in 1995, ruled as absolute monarch of a country which protected American interests but also sowed strife and extremism throughout the Middle East and the world.

In a statement last night Senator John McCain eulogized Abdullah as “a vocal advocate for peace, speaking out against violence in the Middle East”. John Kerry described the late monarch as “a brave partner in fighting violent extremism” and “a proponent of peace”. Not to be outdone, Vice President Joe Biden released a statement mourning Abdullah and announced that he would be personally leading a presidential delegation to offer condolences on his passing.

It’s not often that the unelected leader of a country which publicly flogs dissidents and beheads people for sorcery wins such glowing praise from American officials. Even more perplexing, perhaps, have been the fawning obituaries in the mainstream press which have faithfully echoed this characterization of Abdullah as a benign and well-intentioned man of peace.

I would bet that this story is pretty close to the mark.  It was a guest contribution on David Stockman's website on Saturday---and I thank Roy Stephens for sending it.  It's also worth reading if the topic interests you.

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ECB's QE move adds pressure on China's policy easing

The European Central Bank's announcement on Thursday to switch on the money tap shed light on the deflation risk stalking the euro zone and reminded the elites, who are gathering here for the World Economic Forum's (WEF) annual meeting, of the divergence among policies from different central banks.

The European Central Bank (ECB) on Thursday decided to purchase over 1 trillion euros in public and private sector bonds by the fall of 2016 to counter the deflationary risk and possible stagnation.

ECB President Mario Draghi said the purchasing would start in March 2015 with a monthly amount of 60 billion euros (about 69.48 billion U.S. dollars), and was intended to last until the end of September 2016, but would in any case be conducted until the ECB saw a sustained adjustment in the path of inflation which is consistent with its medium-term inflation maintenance target of below, but close to, 2 percent.

Draghi said the decision to kick off the rescue program was made against a backdrop that inflation dynamics continued to be weaker than expected.

This article, which appeared on the Internet site on Friday, has had headline change since it was posted.  It now reads "Policy divergence talked regarding ECB's QE at WEF".  It's the second contribution of the day from Bill Busser.

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Koos Jansen: Amazingly heavy withdrawals from Shanghai Gold Exchange

China's gold demand as measured by withdrawals from the Shanghai Gold Exchange for the week ending January 16 were "amazing" at 70 metric tonnes, Bullion Star market analyst and GATA consultant Koos Jansen writes. He adds that it was unusual for China to do so much buying as the gold price was rising.

Jansen's analysis is headlined "Booming SGE withdrawals In Week 2, 2015: 70 Tonnes" and it's posted at the Singapore website Internet site on Saturday.  I found this gold-related story on the Internet site.

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Mike Kosares: Gold spike in major currencies is a remarkable start to 2015

The new year has ushered in a remarkable and unexpected turn of events for gold. It is up significantly in four of the seven top currencies (the euro, British pound, and Australian and Canadian dollars), up respectably in two others (U.S. dollar and Japanese yen), and down slightly in the last (Swiss franc).

These charts and the significant gains in gold's value in a very short time demonstrate amply the value of gold as a hedge, not just against inflation but against sudden currency devaluation and systemic financial and economic risks as well. ...

... Though it appears that gold and quantitative easing might be directly correlated, what is really going on is that both simply are reacting to the same problem -- a bad economy with the potential systemic breakdown, not the prospect of inflation. Central banks respond by printing money. Investors respond by buying gold.

This commentary by Mike appeared on the website on Saturday---and I thank Chris Powell for wordsmithing all of the above.

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Al Korelin interviews your humble scribe

This is another interview I did at the Vancouver Resource Investment Conference last weekend---and if my memory serves me correctly, it runs for a bit over five minutes.  I thank Al for taking the time to interview me.  It was posted on the Internet site on Saturday.

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CME Starts Gold Futures in Hong Kong in Price-Benchmark Race

CME Group Inc. started physically delivered kilobar gold futures in Hong Kong as it joins other exchanges vying to establish new price benchmarks in the top user region.

The contract listed on the Comex is tied directly to the price of bullion of 99.99 percent purity in Hong Kong and will be physically delivered to vaults in the special administrative region. CME, owner of the largest futures exchange, said in September that trading may begin in the fourth quarter of 2014.

The Shanghai Gold Exchange started bullion trading in the city’s free-trade zone on Sept. 18 while Singapore Exchange Ltd. began a wholesale kilobar contract on Oct. 13 as more of the world’s gold is processed and used in the region and the 95-year-old fixing benchmark in London gets overhauled. Almost two-thirds of gold jewelry, bars and coins were consumed in Asia in 2013, according to data from the World Gold Council.

“The success of the contract depends if it can get the liquidity,” said Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group Ltd. in Singapore. “Hong Kong is as close to China as you can get without being onshore, so it might appeal to those that don’t have a license to trade onshore. People like to trade the China-London price differential.”

This Bloomberg story, filed from Singapore, appeared on their Internet site just before midnight on Sunday evening---and I thank Manitoba reader U.M. for sending it our way.

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Thailand bourse gearing up for gold exchange

The Stock Exchange of Thailand is gearing up for the establishment of the country's first physical gold exchange after major gold dealers agreed to become members of the new spot gold exchange.

Further details about shareholding between the gold dealers and the stock exchange are being discussed, said SET chairman Sathit Limpongpan. The creation of the spot gold market recently hit a snag due to disputes over management and shareholding between the SET and gold dealers, while some traders at the time said that they would refuse to join the new exchange.

Mr Sathit said the Securities and Exchange Commission had also thrown support behind the idea of setting up the spot gold exchange, but its implementation is pending the approval of the Finance Ministry could enact an organic law to allow the market to be priced and settled in major currencies, the US dollar in particular.

This gold-related news item showed up in the business section of the Bangkok Post on Monday morning local time---and it's another item I found on the Internet site.

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Koos Jansen: India's silver imports rose to record in 2014

India's silver imports in 2014 rose 15 percent from 2013, the most since at least 2009, Bullion Star market analyst and GATA consultant Koos Jansen reports, as investment and jewelry demand shifted from from gold. Jansen adds that Asia is draining Western supplies of silver as well as gold.

His analysis was posted on the website yesterday---and it's certainly worth reading.  I found this silver-related story in a GATA release.

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Moscow Update: Gold During the Crisis

Dmitriy Balkovskiy is a Russian coin dealer in Moscow we’ve interviewed before. Since the ruble’s crash, he’s witnessed some interesting developments in his country, so we asked him for an update.

I would like to expand on Jeff Clark’s piece “Gold Was Up 73% Last Year” with some real-life stories from inside Russia.

First, a small correction… Jeff describes an investor sitting in a Moscow café and reading about gold’s phenomenal rise in rubles in a Russian newspaper. In reality, gold-related info in a Russian newspaper would be buried on page 17 and very difficult to locate. “Serious” gentlemen deal in stocks or real estate; gold coins and bars are for the naïve. In this respect, Russia is no different from the USA, and even worse.

Now to my episodes…

  • Our small office is located about 200 meters from the Kremlin’s entrance, right across the street from it. So sometimes we get visitors from within those walls. In the early afternoon of December 16, a Ukrainian construction worker came in wishing to buy a one-ounce Austrian Philharmonic. He had just finished several months of work at the Kremlin reconstruction site and wanted to get rid of his rubles and take home a hard asset. (Note: December 16, 2014 has already been named the Russian Black Tuesday. On that day, the ruble fell from 58 to 72 per USD in several hours.)

    Now this guy must have been burnt a few times in his life, because he wanted to check the coin for authenticity in every possible way. When he first entered the door, the coin sold for about 86,000 rubles. It took us about 30 minutes to complete the checking procedure to his satisfaction—but when we looked at the price again it had soared above 100,000 rubles. Unfortunately all he had in his pocket was 90,000 rubles. The coin had literally slipped from his grasp.

Yesterday's edition of the Casey Daily Dispatch is one of the best ones that has ever crossed my desk---and easily falls into the absolute must read category.

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Precious metals coveted once more as Draghi acts

Investors' desire for precious metals is deepening after Mario Draghi's $1.3 trillion pledge drove gold to a five-month high and silver to the brink of a bull market.

Their buying helped boost the value of exchange-traded products backed by gold and silver by $8.94 billion this month, the most since September 2012, data compiled by Bloomberg show. Hedge funds and other speculators in futures are the most bullish on gold in two years and have bet more on silver in all but two weeks since the start of November.

At a time when the price of almost every other commodity is sinking, silver and gold are having their best start to a year in more than three decades. The European Central Bank president's stimulus sent the euro to an 11-year low against the dollar, pushed government bond yields lower and raised the appeal of alternatives to currencies that are being revalued.

"Silver is tied to gold, and they move with trust," David Rosenberg, the Toronto-based chief economist at Gluskin Sheff & Associates, which oversees C$8 billion ($6.4 billion), said Jan. 22. "There's an increasing number of global investors who are starting to lose trust in the world's central banks."

This very interesting Bloomberg story, filed from New York, appeared on their website at 12:28 p.m. Denver time on their Monday afternoon---and the precious metal-related stories from GATA just keep on coming.

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Netherlands Increases Gold Holdings for First Time Since ’98

The Netherlands added to its gold reserves for the first time since 1998 as the ninth-biggest holder boosted assets to the highest in seven years, while Russia bought for a ninth month, International Monetary Fund data show.

Bullion reserves in the Netherlands climbed to 20 million ounces or 622 metric tons in December, the highest since 2007, after being unchanged at 19.7 million ounces from December 2008 through November, the IMF’s website showed. Russia, with the fifth-biggest hoard, held 38.8 million ounces last month, the most in at least two decades, the data show.

Central banks globally are adding gold to reserves after reducing holdings for about two decades from the late 1980s as they seek to diversify assets, according to Oversea-Chinese Banking Corp. Worldwide purchases would probably be 400 tons to 500 tons in 2014, the World Gold Council said in November. Gold rose for the first time in four months in December as signs of slowing economic growth spurred haven demand.

This short item, co-filed from Singapore and Melbourne, appeared on the Internet site on Tuesday in the Far East---and Manitoba reader U.M. slid it into my in-box just before 3 a.m. EST this morning.  It's definitely worth reading.

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Scottish village of Tyndrum prepares for '£200m gold rush'

The picturesque village of Tyndrum in Scotland's Grampian Highlands is bracing itself for what could be a surge of prospectors after it was revealed around £200m of gold is located in local hills.

Gold was excavated from the local Cononish mine by Australian firm Scotgold Resources in the 1990s but the firm suffered financial difficulties when the price of gold plummeted and the mine never opened for business.

Now the price of gold has risen to £850 an ounce, potentially turning the gold mine into a literal lucrative goldmine for the company who estimate there could be 248,000 ounces of gold – twice as much as previously thought.

The purity of the gold has also taken the company by surprise – it is 9% purer than previously thought. That means there could be £200m of gold around the town.

This news item was posted n the Internet site on Sunday afternoon GMT---and I thank BIG GOLD editor Jeff Clark for digging it up for us.

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New York Fed's gold vaults' depositors and metal have been declining steadily

In the first of a series of articles about the gold vaults of the Federal Reserve Bank of New York, GATA consultant Ronan Manly reports that the bank's documents indicate a huge decline over recent decades in the number of central banks vaulting gold there as well as the amount of gold vaulted.

Further, Manly finds, the bank has gotten much more secretive about its gold vaulting over the years. Manly's study is titled "The Keys to the Gold Vaults at the New York Fed, Part 1" and it was posted on the Internet site on Friday.

It's another article I found on the Internet site---and it's on the longish side, but it's definitely worth your while.

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Buyers Take a Shine to Gold, Silver Again

Gold and silver are getting another turn in the spotlight, luring investors worried about slowing global growth and surprises by central banks.

On Thursday, the European Central Bank offered the latest reason to pile into precious metals by unleashing a bigger-than-expected bond-buying program amid continued worries about Europe’s economy. Gold futures ended above $1,300 a troy ounce for the first time since August, while silver neared bull-market territory, defined as a 20% increase from a recent low.

Gold and silver are drawing buyers of all stripes, a sign fears about a worsening economic outlook run deep in financial markets. The metals are popular havens for nervous investors but had fallen out of favor after setting price records in 2011 as the U.S. recovery gained speed. Now these metals are luring back some money managers, as collapsing oil prices, fears of a recession in Europe and volatility in currency markets shake their faith in stocks and other investments.

Both metals remain far below their peaks, and many investors are skeptical that economic conditions are dire enough to sustain recent gains. But others make the case that gold and silver look more promising than stocks, which are at or near record highs in many markets, or government bonds, where yields are near zero across the developed world. Some investors also are embracing metals as a store of value in case policies like those announced by the ECB spur inflation.

This gold-related story, posted in the clear, appeared on The Wall Street Journal's website last Thursday evening EST---and I thank Ken Hurt for bringing it to our attention.

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Goldman: It's the Central Banks' Fault We Can't Be More Bearish on Gold

We've heard it all: snow, cold weather, hot weather, non one-time recurring, "one-time, non-recurring" charges, and even Bush. But when it comes to "excuses" for why one is wrong, this morning Goldman's note "Central banks stall a more bearish gold outlook" absolutely takes the cake.

That's right: Goldman just blamed central banks for being unable to be "more bearish" on gold.

While readers let that sink in for a bit, here is the gist of Damien Courvalin's note.

Even more monetary stimulus has helped support gold prices…

While gold prices have trended lower since mid-2013, the decline has been short of our expectations. Recently, the combined support of: (1) weaker-than-expected US economic data; (2) the run-up to the announcement of QE in Europe; and (3) the surprise SNB decision to remove the CHF/EUR cap, have seen prices rise to near $1,300/oz. While we believe that these catalysts are now mostly priced in, and that gold prices will decline in 2015-16, we are nonetheless raising our near-term forecast to current prices.

Wait, so infinitely diluting fiat money and paper claims on wealth, a process which inevitably ends up with the para-dropping of bales of cash, is favorable for hard, "traditional" stores of value? Do go on...

This incredible story showed up on the Zero Hedge website at 8:01 a.m. on Monday morning---and I thank Manitoba reader U.M. for her second offering in today's column.

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Pinch Yourself: Financial Times begins to wonder if central banking is even crazier than gold

Lenin, the implacable Russian revolutionary, despised gold. He thought it should be used to build public lavatories. I was of much the same persuasion early in my career. The yellow metal's economic utility seemed to me minimal in the light of its declining industrial uses. As an investment it was and remains entirely speculative because it yields no income. And since the introduction of index-linked government bonds, any merits it might have as an inflation hedge have become less relevant.

Certainly gold has been a very erratic store of value in recent decades. Anyone who bought gold at the peak of the gold bull market in the early 1980s saw their investment lose 80 per cent of its value in real terms over the next 20 years. And as a protection against political and economic instability it has latterly become a less reliable bolt-hole, failing to rise in price consistently in response to each new geopolitical crisis.

Yet some years ago I changed my mind about the metal.

The first reason was that gold, over millennia, has never defaulted. Humanity thus harbours a psychological commitment to the yellow metal that would probably take not just decades but centuries of terrible investment returns to unravel. That means it is unlikely to lose all its value in our lifetimes even if its industrial uses finally disappear in their entirely and people lose all interest in gold as jewellery.

Heresy has been committed at the Financial Times!  Off with his head, I say!  When you see articles like this allowed to surface in the FT, you know it's time to circle the financial and monetary wagons on an international scale.  How things have changed in the fifteen years since I got involved with GATA.  This Financial Times story from Sunday is posted in the clear in another GATA release.  Needless to say, it's very much worth reading.

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Jan 24, 2015

Kyle Bass: Falling oil to push back Fed rate hike

Hedge fund manager Kyle Bass told CNBC on Friday that falling oil prices are creating a "deflationary environment" that will force the Fed to delay its interest rate increases.

Like many market watchers, the founder of Dallas-based Hayman Capital Management said he had expected the first rate hike to be in June.

"Now maybe you won't. Maybe you'll see it in October or November," Bass said in a "Squawk Box" interview from the World Economic Forum in Davos, Switzerland. "The problem the Fed has now is you have a real kind of deflationary environment because of oil, even though you have close to full employment."

This 4:41 minute CNBC video interview, with transcript, was posted on their website very early Friday morning EST---and today's first news item is courtesy of Ken Hurt.

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U.S. Treasury's Lew backs strong dollar, points to improved economy

U.S. Treasury Secretary Jack Lew said today a strong U.S. dollar was good for America and that the robust performance of the U.S. economy was driving movements in currency markets.

His comments supported a long-standing policy of the Treasury that strength in the currency was positive if it reflected economic fundamentals rather than efforts by foreign governments to gain an unfair edge in global trade.

The dollar has surged about 20 percent against its major trading partners since early May. Lew suggested that fundamentals were a factor in its rise.

"The strong dollar, as all of my predecessors have joined me in saying, is a good thing. It's good for America."

But how long the dollar remains this strong is open to debate.  This Reuters article, based on a CNBC interview from Davos, appeared on their Internet site at 9:53 a.m. EST yesterday---and I found it embedded in a GATA release.

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Richard Duncan: How Capitalism Died---and Where That Leaves Us

This 43:17 minute video speech by Richard Duncan was presented in Melbourne, Australia---and it's not often that anything he writes or says appears in the clear.  So this is a rare opportunity to hear his thoughts.

It was was posted on the Internet site---and I thank D'Anne Blume for finding it for us on Wednesday.

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David Stockman: The Epochal Consequences Of Woodrow Wilson’s War

My humble thesis tonight is that the entire 20th Century was a giant mistake.

And that you can put the blame for this monumental error squarely on Thomas Woodrow Wilson——-a megalomaniacal madman who was the very worst President in American history……..well, except for the last two.

His unforgivable error was to put the United States into the Great War for utterly no good reason of national interest. The European war posed not an iota of threat to the safety and security of the citizens of Lincoln NE, or Worcester MA or Sacramento CA. In that respect, Wilson’s putative defense of “freedom of the seas” and the rights of neutrals was an empty shibboleth; his call to make the world safe for democracy, a preposterous pipe dream.

Actually, his thinly veiled reason for plunging the US into the cauldron of the Great War was to obtain a seat at the peace conference table——so that he could remake the world in response to god’s calling.

But this was a world about which he was blatantly ignorant; a task for which he was temperamentally unsuited; and an utter chimera based on 14 points that were so abstractly devoid of substance as to constitute mental play dough.

This longish commentary appeared on David Stockman's website on Wednesday as well---and is definitely worth reading.  It's another article I'd been saving for today---and it's the first contribution of the day from Roy Stephens.

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‘We didn’t even really know who we were firing at’ – former U.S. drone operator

Former U.S. drone sensor operator Brandon Bryant admits he “couldn’t stand” himself for his participation in the country’s drone program for six years – firing on targets whose identities often went unconfirmed.

Since 2001, and increasingly under the Obama administration, the US has been carrying out drone strikes against targets believed to be affiliated with terrorist organizations in countries like Afghanistan, Yemen, Pakistan and Somalia. The program, which has been shrouded in secrecy, has been routinely criticized for the high number of resultant civilian casualties.

Pakistan’s Peshawar High Court ruled in 2013 that the attacks constitute a war crime and violate the UN Universal Declaration on Human Rights. Meanwhile the Obama administration continues to insist that drone warfare is a precise and effective method of combat.

According to data collected by the human rights group Reprieve and published last November, attempts to kill 41 targeted individuals across Pakistan and Yemen resulted in the deaths of some 1,147 people. Often a kill requires multiple strikes, the group noted.

This article appeared on the Russia Today website at 9:06 p.m. Moscow time on their Thursday evening---and it's the second offering in a row from Roy Stephens.

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Former FBI Official Ali Soufan Condemns Guantanamo Torture

SPIEGEL: Mr. Soufan, during your time as an FBI agent, you spent years conducting interrogations. Now you have also written a book about torture at secret American prisons. Were there any surprises for you in the recently released US Senate Intelligence Committee report on CIA torture?

Soufan: Yes, there were few things I didn't know. That we put prisoners (including Zubaydah) in a big box for a total of 266 hours -- that's 11 days and 2 hours -- and that we simply kept one of our most important prisoners, our only high-value-detainee at the time, in total isolation for 47 days instead of questioning him and gaining important information. As a matter of fact, I didn't know about these things.

SPIEGEL: Were details of the report still shocking to you, even though you had known about the allegations for years?

Soufan: At some point it was difficult for me to read on, especially the passages about the torture of the first important prisoner we interrogated, the terror facilitator Zubaydah. The level of unprofessionalism that the report reveals is incredible. It is really shocking. But I should not be surprised, given that 80 percent of this harsh interrogation program was outsourced to outside contractors who had no clue about interrogations. We left our most important prisoners to amateurs.

This disturbing article appeared on the German website at 4:06 p.m. Europe time yesterday afternoon---and I thank Roy Stephens for his third story in a row in today's column.  It now sports a softer headline.  It reads "Ex-FBI Official: 'We Left Our Most Important Prisoners to Amateurs'".

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Las Vegas Consumer Electronics Show: All Things Flying

More than the usual electricity of Las Vegas air, the skies above CES are buzzing with drones and flying cameras — some tiny, some mighty, some simply smart and others downright brilliant. 

Move over selfie stick. The sky (or maybe the convention center ceiling) is the limit at this year’s International Consumer Electronics Show. Flying quadcopters, octocopters and wearable cameras that boomerang back to you — all have one thing in common: they are able to capture every moment like an eye in the sky.

Drones are so ubiquitous at this year’s CES, event organizers sponsored the Game of Drones, where remote-controlled drones faced off in a rowdy game of skyward bumper cars. For the event, participants used the Action Sports Airframe, a drone body design that’s able to resist fire, water and extreme impacts. The resulting carnage of crashes and broken blades.

These are just a few of the drones, cameras and copters buzzing around CES this year, but it’s clear we can expect more in the near future. Ben Wood, senior analyst as CCS Insights said drones, while exceedingly fun, are a magnet for all sorts of privacy and safety issues.

This extremely interesting story, with lots of video clips embedded, appeared on the Internet site back on Wednesday, January 14---and I forgot to include it in last Saturday's column, so here it is now.  I thank Orlando, Florida reader Dennis Mong for sharing it with us.

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FATCA: “The Worst Law Nobody Has Ever Heard of,” [Part II]

Whom does FATCA affect?

The short answer is: just about everybody.

At the top of the list are those who carry U.S. indicia (see Part I) and who live outside of the United States.

In Canada these are estimated to represent approximately 3% of the Canadian population. Add to that their spouses and family members with whom they share accounts, and a much larger figure is indicated (perhaps, as has been suggested by some, as great as 12%.)

Publicity about FATCA has served to educate not only “overseas U.S. Persons” about citizenship-based taxation (CBT) and the Foreign Bank Account Report (FBAR), but also those who employ them or otherwise associate with them.

Wow!  This amazing article appeared on the Internet site yesterday---and I thank their senior editor, Nick Giambruno for sharing it with us.  It's definitely a must read, if it affects you, or anyone you know.

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‘Easy money’ to worsen inequality in Europe – George Soros

The decision by the European Central Bank to begin €1.14 trillion quantitative easing (QE) program will eventually reinforce inequality within Europe and have serious political consequences, billionaire George Soros told RT in Davos.

“Excessive reliance on monetary policy and attempts to enrich the owners of property will not relieve the downward pressure on wages,” said Soros to a question from RT during a news conference in Davos. He says it’s too early to react to QE measures in Europe, but they will clearly deepen the crisis of trust between the rich and the poor.

The European Central Bank announced Thursday a €1.14 trillion ($1.3 trillion) quantitative easing program from March. The bank will buy government debt by monthly injecting €60 billion in public and private securities. The move is expected to drive inflation to the target of 2 percent and overcome a triple-dip recession in the eurozone.

The anti-poverty charity Oxfam released a report ahead of the Davos meeting this week, warning of the unprecedented economic inequality splitting the world apart.

This Russia Today article appeared on their website at 11:08 a.m. Moscow time on their Friday morning---and I thank Roy Stephens for sending it.

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Coeure Says ECB Might Extend QE as Visco Calls Buying Open-Ended

European Central Bank policy makers Benoit Coeure and Ignazio Visco underlined that their new bond-buying program will be extended if it doesn’t show results.

“If we haven’t achieved what we want to achieve,” said Coeure, the ECB’s head of market operations, “then we’ll have to do more, or we have to do it for longer.” Visco, the Italian central-bank governor, said earlier on Friday that “we are open-ended” about asset purchases.

Both men spoke in Bloomberg Television interviews in Davos, where they were among a small coterie of Governing Council members who traveled to the Swiss resort after completing an historic monetary-policy decision in Frankfurt the day before. ECB President Mario Draghi pledged to buy 60 billion euros ($68 billion) a month of assets including government bonds through September 2016, while also committing to do so until officials see “a sustained adjustment in the path of inflation.”

The ECB’s calculations show the program will add 0.4 percentage point to inflation in 2015 and 0.3 percentage point in 2016, according to a euro-area official. Consumer prices fell an annual 0.2 percent in December, compared with the ECB’s medium-term inflation goal of just under 2 percent. Prices probably slid 0.5 percent this month from a year earlier, according to a Bloomberg survey before data due on Jan. 30.

This Bloomberg news item, filed from Frankfurt, appeared on their Internet site at 5:01 p.m. Denver time yesterday afternoon---and I thank Manitoba reader U.M. for finding it for us.

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Jim Rickards: The Currency Wars’ “Pearl Harbor”

The most dramatic battle yet in the currency wars took place last Thursday. It was the financial equivalent of a Pearl Harbor sneak attack…

“I find it a bit surprising that he did not contact me,” IMF Director Christine Lagarde told CNBC’s Steve Liesman that day, “but, you know, we’ll check on that.”

You can almost imagine the conversation afterwards between Mario Draghi of the European Central Bank (ECB) and Swiss National Bank (SNB) President Thomas Jordan…

Mario Draghi: “Did you tell Christine?”

Thomas Jordan: “I thought you were going to tell her…”

Mario Draghi:Wait, I thought you were!”

This must read commentary, which includes Jim's comments on gold, appeared on the Internet site on Thursday---and I thank West Virginia reader Elliot Simon for sending it along.

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Germany's finance minister says no Greek euro exit modelled

Germany has not modelled a potential Greek exit — the so-called "Grexit" — from the 19-nation eurozone, Germany's finance minister insisted Friday, two days ahead of a Greek election that may bring an anti-bailout party to power in Athens.

"We don't model any exit," Wolfgang Schaeuble said at a panel Friday at the World Economic Forum in the Swiss resort of Davos.

The potential of a "Grexit" has resurfaced ahead of Sunday's election, which opinion polls suggest will see the left-wing Syriza party come first ahead of Prime Minister Antonis Samaras' center-right New Democracy.

While praising Greece's better-than-expected efforts to get its economy in order, Schaeuble warned that Greece won't be allowed to benefit from the European Central Bank's new stimulus program if the government in Athens ditches the reform program required for bailout cash.

This AP story, filed from Davos, was picked up by the Internet site early Friday morning EST---and it's the second offering of the day from reader U.M.

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Peculiarities of Russian National Character

Recent events, such as the overthrow of the government in Ukraine, the secession of Crimea and its decision to join the Russian Federation, the subsequent military campaign against civilians in Eastern Ukraine, western sanctions against Russia, and, most recently, the attack on the ruble, have caused a certain phase transition to occur within Russian society, which, I believe, is very poorly, if at all, understood in the west. This lack of understanding puts Europe at a significant disadvantage in being able to negotiate an end to this crisis.

Whereas prior to these events the Russians were rather content to consider themselves “just another European country,” they have now remembered that they are a distinct civilization, with different civilizational roots (Byzantium rather than Rome)—one that has been subject to concerted western efforts to destroy it once or twice a century, be it by Sweden, Poland, France, Germany, or some combination of the above. This has conditioned the Russian character in a specific set of ways which, if not adequately understood, is likely to lead to disaster for Europe and the world.

Lest you think that Byzantium is some minor cultural influence on Russia, it is, in fact, rather key. Byzantine cultural influences, which came along with Orthodox Christianity, first through Crimea (the birthplace of Christianity in Russia), then through the Russian capital Kiev (the same Kiev that is now the capital of Ukraine), allowed Russia to leapfrog across a millennium or so of cultural development. Such influences include the opaque and ponderously bureaucratic nature of Russian governance, which the westerners, who love transparency (if only in others) find so unnerving, along with many other things. Russians sometimes like to call Moscow the Third Rome—third after Rome itself and Constantinople—and this is not an entirely empty claim. But this is not to say that Russian civilization is derivative; yes, it has managed to absorb the entire classical heritage, viewed through a distinctly eastern lens, but its vast northern environment has transformed that heritage into something radically different.

This extremely interesting essay put in an appearance on the website on Tuesday, January 13---and it's worth reading if you want a quick history lesson on Russia's origins.  I thank Tolling Jennings for digging it up for us---and for obvious reasons, had to wait for a spot in my Saturday missive.

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The Chilly Fallout Between Putin and His Oligarch Pals

Vladimir Putin isn’t just angering leaders from Berlin to Washington. He’s irking some of his richest friends, too, by snubbing their pleas to end the conflict in Ukraine and ostracizing all but a handful of hardliners.

The ruble’s plunge has heightened opposition to Putin’s backing of the rebellion in Ukraine among his wealthiest allies, prompting the president to shrink his inner circle from dozens of confidants to a small group of security officials united by their support for the separatists, two longtime associates said.

Putin is increasingly suspicious of men who owe their wealth to their ties to him and who are being hurt the most by U.S. and European sanctions, according to the people, who spoke on condition of anonymity to avoid reprisal. The 21 most affluent people in the country lost a total of $61 billion last year, a quarter of their combined fortune, according to the Bloomberg Billionaires Index.

Businessmen who have long been close to Putin are “on the periphery now,” said Sergei Markov, a political consultant who helped monitor the referendum in Crimea that led to Russia’s annexation of the peninsula in March.

This longish Bloomberg article, filed from Moscow, should be read with your propaganda meter on it's high gain setting.  It was posted on their Internet site at 6:50 a.m. Denver time on Friday morning.

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Saudi King Abdullah’s death sets up complex succession process

Saudi Arabia’s King Abdullah bin Adbul Aziz died early Friday, setting the stage for a transition of power at a critical moment as the key U.S. ally in the Middle East struggles with falling oil prices and rising Islamist violence.

The monarch, believed to be 90, was succeeded by his brother, Crown Prince Salman, according to state television. That put the region’s most important Sunni power and America’s closest Arab ally in the hands of a 79-year-old who is reportedly in poor health and suffering from dementia.

Salman’s rise to the throne postpones the question of when the Saudi monarchy will turn to the next generation of princes to run their country of 28 million people at a crucial moment in a region mired in crisis.

This in-depth article appeared on The Washington Post's website on Thursday---and is worth reading if the topic interests you, which it should.  I thank Casey Research's own Marin Katusa for passing it around yesterday.

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James Rickards discusses future of Saudia Arabia

This 7:43 minute video clip from the Internet site, was conducted by CCTV America---and it's certainly worth watching.  It was posted on Thursday sometime---and it's courtesy of Harold Jacobsen.

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Record high Chinese imports of Russian oil in 2014

Chinese imports of oil from major OPEC countries fell last year, while the purchases of Russian oil saw a record increase, said the Chinese General Administration of Customs. It is part of Chinese plans to diversify its oil sources.

Last year, the share of Saudi oil in the Chinese market fell 8 percent and the volume from Venezuela dropped 11 percent (below 20 million tons), while the share of Russian oil leapt 36 percent, the equivalent to 665,000 barrels a day, General Administration of Customs said Friday in a report.

Saudi Arabia remains China’s largest supplier with 49.67 million tons of exports in 2014, or 997,000 barrels a day, the least since 2010.

This Russia Today story, filed from Moscow, was posted on their Internet site at 4:01 p.m. local time, which was 8:01 a.m. in New York.  It's another contribution from reader U.M.

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Doug Pollitt: Vlad in the machine

While the United States has been running a speculative attack on the Russian ruble, Russia likely is running a more subtle attack on U.S. dollar hegemony by putting a bid under gold, Doug Pollitt of Pollitt & Co. writes in the Toronto brokerage firm's market letter for January.

Pollitt also notes the complaints of Comex metals traders about "spoof" trades driven by computers, the sort of practice that would have driven human traders from the floor in the old days. With Pollitt's kind permission, his January letter, titled "Vlad in the Machine," is posted in PDF format at GATA's Internet site.

This amazing 7-page article defies description, but it definitely falls into the absolute must read category---and you can come to your own conclusions about it once you're done.

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Koos Jansen: Will gold be part of a new international monetary system?

Bullion Star market analyst and GATA consultant Koos Jansen, reviewing U.S. government records showing government officials meeting in secret to plan their secret interventions in the gold and currency markets -- that is, not "conspiracy theory" but conspiracy facts -- joins those observers who are inclined to think that the secret policy of the world's major central banks is to redistribute gold reserves among themselves more fairly. A review of such speculation was dispatched by GATA on Tuesday.

Jansen's commentary is headlined "Will Gold Be Part of a New International Monetary System?" and it's posted at the Internet site.  I stole all of the above from a GATA release, but the first reader through the door with the story yesterday was Dan Lazicki.  It's worth reading, as is the link in the previous paragraph.

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Sprott Money Weekly Wrap Up

Listen to Eric Sprott share his views on the ongoing chaos in foreign currency markets, the renewed interest in gold and his short-term outlook for that metal.

This 9:46 minute audio interview was conducted by's Geoff Rutherford yesterday.

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Dr. Marc Faber: Feckless central banks to underpin gold

Central bankers are professors who never worked a day in their lives and whose easy-money policies will ultimately be disastrous for markets, says Marc Faber, publisher of the Gloom, Boom & Doom Report.

That's why he says he thinks gold could be the "trade of the century" and why he recommends additional exposure to gold through junior miners. He explains his investing strategy today on Commodities.

This 7:07 video clip was posted on Canada's Broadcast News Network on Friday---and I thank reader Ken Hurt for his second contribution to today's column.  I haven't had the chance to listen to it yet, but will make amends over the weekend.

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Lawrence Williams: 2015 Black Swans proliferate – Safe Haven gold investment to benefit

January 2015 has already been remarkable for the number of Black Swan (unanticipated) events which have hit the markets in such a short space of time.  Some of these have been totally unheralded like the Swiss National Bank’s decision to unpeg the Swiss Franc from the Euro – which really did take the markets by surprise – while others may, in hindsight have been a little more predictable.  These include the escalation of fighting in Eastern Ukraine as both sides appear to have used a recent ceasefire to boost their military arsenals and prepare for more fighting; the death yesterday of King Abdullah of Saudi Arabia – perhaps predictable in that he was 90 years old and in poor health – but nonetheless promoting new uncertainties in what is a particularly volatile part of the world; the apparent growth in strength of Boko Haram in West Africa which has the potential perhaps to spread to major gold producing areas if the rebel group is unable to be held back; the Charlie Hebdo massacre in Paris which threatens to unleash an anti-Muslim backlash throughout Europe, or stimulate copycat killings by other fanatical fundamentalists.  And all this within a three week period!  Who knows what else lies in store for us in the remaining 49 weeks that lie ahead?

Gold should thrive on uncertainty in terms of a big rise in safe haven demand – and we already look like having a very uncertain year ahead.  Gold may have come back from its recent interim peaks following the SNB decision in  particular and the much-heralded announcement of the ECB’s QE programme (although this turned out to be bigger than expected) and it seems to be having difficulty today holding on to the $1,300 level.  But this could be just a temporary hiatus.  As other geopolitical and economic factors come into play, there could be a huge boost – and that’s just from events which might be seen as predictable.  More Black Swans could further upset the applecart that is the global economy and lead to yet another gold price upsurge as a result.

This commentary by Lawrie showed up on his website sometime yesterday.

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This is What Gold Does in a Currency Crisis, Euro Edition

Yesterday the European Central Bank acknowledged that the currency it manages is being sucked into a deflationary vortex. It responded in the usual way with, in effect, a massive devaluation. Eurozone citizens have also responded predictably, by converting their unbacked, make-believe, soon-to-be-worth-a-lot-less paper money into something tangible. They’re bidding gold up dramatically.

So after falling hard in 2013 and treading water for most of 2014, the euro price of gold has gone parabolic in the space of a couple of months. This sudden rather than gradual awakening is the standard pattern for a currency crisis, mainly because it takes a long time for most people to figure out their government is clueless and/or lying. But once they do figure it out, they act quickly.

Europe’s gold chart isn’t as dramatic as Russia’s (see it here) because Europe doesn’t depend on oil exports and the euro, while dropping versus the dollar, isn’t yet in free-fall. But with another trillion euros due to hit the market in the coming year, and a series of currency union-threatening political crises in the pipeline, the flight to safety could easily become a stampede.

This short, but excellent article, along with a couple of terrific charts, appeared on the Zero Hedge Internet site at 8:09 a.m. on Friday morning.

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Lawrence Williams: Russian Central Bank continues to build its gold reserves

It had been suggested last month that Russia would have to sell some of its gold reserves – the World’s fifth largest national central bank holding (ignoring the IMF’s holding) – to help prop up the ruble.  The Russian currency has been being driven down, almost in free fall for a time, by the unholy alliance of drastically falling oil and gas prices coupled with U.S. and European sanctions over the Crimea annexation and possible Russian involvement in the continuing uprising by pro-Russian rebels in Eastern Ukraine.

But, the opposite has been the case.  The Russian Central bank announced yesterday that its gold reserves grew by a further 600,000 ounces (18.7 tonnes) in December – the ninth successive month of gold reserve increases.  Clearly President Putin is a believer in the ultimate economic benefits of a strong national gold holding – particularly if some kind of global reserve currency realignment lies ahead in the relatively near future.

As a Reuters report points out, Russia has now more than tripled its gold reserves in the past 10 years, even as it recently has presumably had to use some of its its international currency reserves to defend the ruble with the national economy having been driven to the brink of recession. The ruble slid almost 50 percent in the past 12 months which makes the nation’s gold reserves ever more important to its global economic status.

This very interesting commentary by Lawrie was also posted on this website yesterday---and it's worth reading as well.

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India's Gold imports come to halt as discounts widen

Gold import in India has halted in recent days, with the market offering a widening discount over prices in London, now at $12-15 an ounce or Rs 240-300 per 10g.

When demand is good, importers charge a premium over London prices. With this not so, they would like to offload their stocks; holding the metal is costly. The present discounts are due to a huge carryover stock from imports in November, when 151 tonnes came in, far above India’s normal monthly demand.

Only 39 tonnes of gold was imported in December, when the marriage season had paused. The latter has restarted after January 14 but most of the buying was done  when prices were lower in October-November. Now, demand is also absent as global prices have shot up to $1,300 an oz.  

A person working closely with gold importing agencies said the high discounts had led to a halt in imports. The price in India is determined on the cost of imports and the margins in these are thin. The prevailing discount of one per cent makes these unviable. This month so far, only 15-20 tonnes might have come in.

This gold-related news story appeared on the Internet site at 1:21 p.m. IST on their Saturday afternoon---and it's courtesy of reader Danny Carroll.

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Jan 23, 2015

Q4 Revenue Growth of S&P 500 Collapses 68%

While public companies can manipulate their per-share earnings with stock buyback programs and other tricks (like reducing their capital expenditure budgets), there is little companies can do to mask revenue growth.

For the fourth quarter of 2014, S&P 500 companies are expected to report a pathetic revenue growth of 1.1%—that’s 68% below the average revenue growth over the past three years of 3.5%. (Source: FactSet, January 9, 2015.) Weak revenue growth means companies are having a difficult time selling more goods or services to their customer or they are having troubles getting more customers. At the very core, poor revenue growth is a reflection of poor economic growth.

And we have seen more and more companies provide a negative outlook for their corporate earnings. So far, of the 108 companies on the S&P 500 that have provided an outlook, 81% of them have issued negative guidance—well above the five-year average of 68%. (Source: Ibid.)

Earnings growth expectations are collapsing, too. At the end of September 2014, analysts had expected the S&P 500 companies to show earnings growth of 8.4% in the fourth quarter of 2014. Now they expect this rate to be only 1.1%.

This article appeared on the Internet site yesterday sometime---and I thank Dan Lazicki for today's first story.

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Larry Summers warns of epochal deflationary crisis if Fed tightens too soon

The United States risks a deflationary spiral and a depression-trap that would engulf the world if the Federal Reserve tightens monetary policy too soon, a top panel of experts has warned.

"Deflation and secular stagnation are the threats of our time. The risks are enormously asymmetric," said Larry Summers, the former US Treasury Secretary.

"There is no confident basis for tightening. The Fed should not be fighting against inflation until it sees the whites of its eyes. That is a long way off," he said, speaking at the World Economic Forum in Davos.

Mr Summers said the world economy is entering treacherous waters as the U.S. expansion enters its seventh year, reaching the typical life-expectancy of recoveries. "Nobody over the last fifty years, not the IMF, not the US Treasury, has predicted any of the recessions a year in advance, never."

This Ambrose Evans-Pritchard offering, filed from Davos, was posted on The Telegraph's website at 12:44 p.m. GMT on Thursday afternoon---and it's courtesy of South African reader B.V.

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Hugo Salinas Price: Folly Triumphant

The world today is in the hands of a set of quacks who pass themselves off as "Economists"; their pseudo-economic science is nothing but ancient superstition dressed in modern garb. Yesterday they sold us "Indulgences", today they sell State Bonds. The whole spectacle should be riotously funny except for the fact that these quacks and their coterie of flatterers who grant them awards, distinctions and Nobel Prizes have driven the world to the brink of destruction.

We behold a spectacle worthy of the satire of the great Erasmus of Rotterdam, who wrote his immortal "In Praise Folly" in 1511. His treatise became the world's first "Best Seller" - all literate Europe read it and laughed. Laughter is an enormously effective demolisher of pomposity, as the semiologist Humberto Eco pointed out in his book "The Name of the Rose".

Would that we had an Erasmus around , to make the world laugh itself silly at the antics of the quacks who pass themselves off as Economists, Central Bankers and Finance Ministers in the world today.

This very interesting essay by Hugo appeared on the Internet site yesterday---and I found it embedded in a GATA release.

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Paul Singer: The Fed is causing inequality

When it comes to bashing the Federal Reserve, Paul Singer is far from finished.

In November, Singer, who runs the hedge fund Elliott Management, said that that the U.S.’s economic recovery had basically been “faked” by the Federal Reserve’s stimulus efforts. He called the good economic numbers coming out “cooked.”

On Wednesday during a panel discussion at the World Economic Forum in Davos, Switzerland, Singer continued his attack on the Fed’s policies. He said that the Fed’s quantitative easing bond buying program has been the main driver of income inequality and is exacerbating social instability around the world.

Inequality is a function of the government’s policies,” said Singer. “There is no question that QE is adding to it.

Singer argued that any predictive power markets once had has been eroded by the Fed. “I would put ‘market’ in quotes,” said Singer. “You don’t know what the real price is. The market is determined by the Fed.

This very worthwhile read, filed from Davos, appeared on the Internet site at 2:25 p.m. EST on Wednesday---and I found it in yesterday's edition of the King Report.

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Powerful investment wisdom from Jim Rickards: The economy is on a knife’s edge

We talk about the U.S. economy and its fundamentals, the Fed (“The Fed has the worst models. I’m not joking, they have the worst forecasting record of all time. Over the past five years they have been consistently wrong, by orders of magnitude.”) and what they’re most likely to do (or not do).

He discusses how the economy is really on a knife’s edge right now as the great battle—between natural forces that are pushing for deflation and central banks and governments that are pushing for inflation—plays out.

He shares his advice on what investors are supposed to do in this environment (hint: prepare for both and hold real assets).

We talk about oil prices and how the fallout from oil’s drop is likely to wipe out a significant part of the $10 trillion debt market related to oil. If the default rate hits only 10%, this means a trillion dollars is on the line. More than in the sub-prime crisis a few years ago.

This 25:49 minute audio interview with Jim, was hosted by Simon Black---and was posted on the Internet site on Thursday sometime.

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Two video interviews with Jim Rickards

The first video interview was posted on the Bloomberg website yesterday---and it runs for 7:10 minutes.  Jim and Bloomberg's Lisa Abramowicz  discuss current global geopolitical risks---and it's headlined "Rickards: Poroshenko Should Not Be in Davos".

The second started off life on the Russia Today website---and is now on  It's headlined "Canada's Currency War"---and the interview with Jim runs from the 3:45 minute mark, up until the 12:00 minute mark.  The link is here.

Harold Jacobsen sent me the first interview---and reader "Harald" beat reader "Harold" by one minute on the Russia Today interview.

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Sprott Money Interviews Ed Steer at the Vancouver Resource Investment Conference

Sprott Money's Geoff Rutherford interviewed me four about four minutes on Monday afternoon---and here are the results.  We discuss oil, the Swiss National Bank throwing in the towel on the euro peg---and gold.

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Oil Drillers ‘Going to Die’ in 2Q on Crude Price Swoon

Oil drillers will begin collapsing under the weight of lower crude prices during the second quarter and energy explorers who employ them will shortly follow, according to Conway Mackenzie Inc., the largest U.S. restructuring firm.

Companies that drill wells and manage fields on behalf of oil producers will be the first to fall after the benchmark American crude, West Texas Intermediate, lost 57 percent of its value in seven months, said John T. Young, whose firm led the city of Detroit through its 2013 bankruptcy.

Oil companies have slashed thousands of jobs, delayed billions of dollars in projects and dropped or scaled back expansion plans in response to the prolonged rout in crude prices. For oilfield service providers that test wells and line the holes with steel and cement, the impact of price reductions forced upon them by explorers will start to pinch hard during the second quarter, Young said Thursday.

“The second quarter is going to be devastating for the service companies,” Young said in a telephone interview from Houston. “There are certainly companies that are going to die.”

This Bloomberg article, filed from Chicago, showed up on their website at 2:39 p.m. Denver time Thursday afternoon---and it's another offering from Dan Lazicki.

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E.C.B. Stimulus Calls for 60 Billion Euros in Monthly Bond-Buying

The European Central Bank said on Thursday that it would begin buying hundreds of billions of euros worth of government bonds in an aggressive, though some say belated, attempt to prevent the eurozone from becoming trapped in long-term economic stagnation.

The bank’s president, Mario Draghi, said the central bank would begin buying bonds worth 60 billion euros, or about $69.7 billion, a month. That is more spending than the €50 billion a month that many analysts had been expecting.

The long-awaited program, known as quantitative easing, is meant to spur growth in the listless eurozone economy and to raise inflation to healthier levels. In December, inflation in the 19 countries of the eurozone fell below zero and raised the specter of deflation, a sustained decline in prices that can lead to higher unemployment and that is notoriously difficult to reverse.

As a further stimulus step, the European Central Bank also said on Thursday that it was cutting the interest rate it charges on loans to commercial banks, as long as the banks commit to lending that money to companies or individuals. The new rate would be 0.05 percent, down from 0.15 percent.

This New York York Times article, filed from Frankfurt, put in an appearance on their website yesterday morning sometime---and it's the first offering of the day from Roy Stephens.

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SocGen Explains That Since The ECB's QE Will Fail, It Will Need To Be Increased To €3 Trillion and Include Stocks

There are a bunch of things in the ECB postmortem note just released by SocGen's Michel Martinez, reproduced below, but here are the punchlines.

First, on the impact of ECB Q.E. on the economy: "we argue ECB QE could be five times less efficient than in the US. In December, press reports suggested that the ECB had run studies suggesting that a €1000bn QE programme would only boost price levels by 0.2-0.8 after two years, five to nine times less efficient than the studies for the U.S. or the U.K. The impact on GDP is not provided, but it would be reasonable to assume the same impact as on inflation on a cumulative basis."

In other words, it will be an outright failure as it "tries" to boost inflation expectations and the European economy in its current format. That, as a reminder, is its stated purpose.

So what does SocGen suggest? "The potential amount of QE needed is €2-3 trillion! Hence for inflation to reach close to a 2.0% threshold medium term, the potential amount of asset purchases needed is €2-3 trillion, not a mere €1 trillion."

And since there is nowhere near enough bond supply in Europe, the ECB will have to proceed with monetizing [drum roll] stocks.  "Should the ECB target such an expansion of its balance sheet, it would have to ease some conditions on its bond purchases (liquidity rule, quality...) or contemplate other asset classes- equity stocks, Real Estate Investment Trust-(REIT), Exchange-traded fund (ETF)...- as the BoJ previously."

This Zero Hedge commentary appeared on their Internet site at 3:27 p.m. yesterday afternoon---and it's the third offering of the day from Dan Lazicki.

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Mario Draghi's QE blitz may save southern Europe, but at the risk of losing Germany

Mario Draghi has achieved a spectacular triumph. His headline offering of €60bn (£45bn) a month in quantitative easing comes in the face of scorched-earth resistance from the German Bundesbank and the EMU creditor core. It is finally big enough to make an economic difference.

Yet today's shock-and-awe action by the European Central Bank (ECB) comes three years late, after the eurozone has already been allowed to drift into deflation, and very nearly into a triple-dip recession.

The fact that the ECB is having to act on this scale a full six years into the world's post-Lehman recovery is in itself an admission that policy has been horribly behind the curve. Mr Draghi told us year ago in Davos that warnings of deflation were jejune and that QE was out of the question.

His hands were tied, of course, whatever he really thought at the time. He could not move too far beyond the ECB's centre of gravity. He had to demonstrate that all else had failed, and all else did then fail.

This commentary by Ambrose Evans-Pritchard, who never met a money printing program he didn't like, was filed from Davos---and was posted on the Internet site at 5:18 p.m. GMT yesterday afternoon.  It's definitely worth reading---and I thank Roy Stephens for sending it along just after midnight.

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E.U.-Russia row: Serbia offers to bang heads together

"I think the presidents should be locked up in a room until they come up with a solution," says Serbia's President Tomislav Nikolic of the leaders of Russia and the European Union.

Serbia certainly has the credentials to act as honest broker in the dispute that has arisen over the conflict in Ukraine.

It has just completed its first year of formal negotiations to join the E.U. But it is maintaining its strong ties with Russia and refusing to implement sanctions, despite pressure from Brussels.

President Nikolic is well-known for his plain-speaking style, occasionally landing in diplomatic hot water as a result.

This BBC news item, filed from Belgrade, was posted on their website on Wednesday sometime---and it's another contribution from reader B.V.

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Russia, Ukraine agree to partial weapons withdrawal

Diplomats from Russia and Ukraine agreed Wednesday to pull back heavy weapons from an agreed demarcation line in accordance with the Minsk agreement of September, just hours after separatist forces deployed more arms to east Ukraine.

German Foreign Minister Frank-Walter Steinmeier, who hosted a meeting of his counterparts from Russia, Ukraine and France, said the four parties had agreed that the demarcation line defined in the Minsk agreement of September last year should form the basis for the withdrawal.

Under the plan, Ukraine and the pro-Russian separatists would pull back their heavy arms 15 kilometres (nine miles) on either side of the line, though there was no agreement on a withdrawal of all troops.

“Finally there was an agreement reached today that the demarcation line, mentioned in the Minsk protocol, will be the line from which the withdrawal of heavy weaponry should start now,” Steinmeier said late on Wednesday after talks in Berlin with his counterparts from France, Russia and Ukraine.

We've heard this all before, dear reader.  Let's see if this 'agreement' works out differently.  This longish news item appeared on the Internet site yesterday sometime---and my thanks go out to Roy Stephens for finding it for us.

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Wider Chaos Threatens as Fighters Seize Branch of Libya’s Central Bank

The battle for control of Libya threatened to break open its central bank on Thursday as fighters with one of the country’s two warring factions seized control of its Benghazi branch, risking an armed scramble for its gold reserves that could cripple the last functioning institution in the country.

The Central Bank of Libya is the great prize at the center of the escalating armed conflicts that have consumed the country since the overthrow of Col. Muammar el-Qaddafi more than three years ago. It has also been the main shield preventing Libya’s descent into utter chaos and deprivation.

The central bank is the repository for Libya’s oil revenue and holds nearly $100 billion in foreign reserves. A desire for a share of that wealth has helped motivate the violent competition among an array of militias fighting for money and influence. They have carved the country into warring fiefs, destroyed its two largest airports, bombed and shelled civilian neighborhoods and burned down refineries and oil depots — driving the oil output that is the mainstay of Libya’s economy down to less than 250 barrels a day from as much as 1.7 million a day at its peak.

As a result, Libyans across the country endure electricity blackouts for hours a day, long lines for scarce fuel at gas stations, and shortages of cooking oil despite its vast energy resources.

This New York Times story, filed from Bayda, Libya, put in an appearance on their Internet site yesterday sometime---and it's definitely worth reading.  I thank International Man senior editor Nick Giambruno for passing it around yesterday.

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King Abdullah, a Shrewd Force Who Reshaped Saudi Arabia, Dies at 90

King Abdullah of Saudi Arabia, who came to the throne in old age and earned a reputation as a cautious reformer even as the Arab Spring revolts toppled heads of state and Islamic State militants threatened the Muslim establishment that he represented, died on Friday, according to a statement on state television. He was 90.

The Royal Court said in a statement broadcast across the kingdom that the king had died early Friday. The royal court did not disclose the exact cause of death. An announcement quoted by the official Saudi Press Agency said the king had a lung infection when he was admitted on Dec. 31 to a Riyadh hospital.

The king’s death adds yet another element of uncertainty in a region already overwhelmed by crises and as Saudi Arabia is itself in a struggle with Iran for regional dominance.

The royal family moved quickly to assure a smooth transition of power in a nation that is a close ally of the United States, the world’s largest exporter of oil and the religious center of the Islamic faith. In a televised statement, Abdullah’s brother, Crown Prince Salman, announced that the king had died and that he had assumed the throne.

This news item showed up on The New York Times website yesterday sometime---and it's courtesy of reader Gerold Becker.  Manitoba reader U.M. sent around the Zero Hedge take on this story---and it's headlined "Saudi King Abdullah Has Died; Crude Prices Jump".

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Moscow to Beijing in 2 days: China to build $242bn high-speed railway

China is going to build a $242 billion (1.5 trillion yuan) high-speed rail link between Beijing and Moscow. The line will cut the journey time from five to 'two days', say Chinese authorities.

The railway will be 7,000 kilometers long and go through Kazakhstan, reports Bloomberg citing Beijing’s city government on the social networking site Weibo, China’s alternative to Twitter. The railway will make travel easier between Europe and Asia, the statement said.

China is actively promoting its high-speed railway technology and sees Russia as an especially attractive market because of its strained relations with Western countries over Ukraine.

In October 2014 Russia and China signed a memorandum of understanding over a high-speed railway connection. Russian Railways then reported that its purpose was to plan for a high-speed Moscow - Beijing Eurasian transport corridor.

This news story, filed from Moscow, was posted on the Russia Today website at 3:22  p.m. Moscow time on their Thursday afternoon, which was 7:22 a.m. in New York---and it's another offering from reader B.V., for which I thank him.  The Zero Hedge take on this is provided by 'David in California'---and it's headlined "More Isolation? Russia, China To Build $240 Billion High-Speed Rail Link".

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JP Morgan eyes gold for Natural Resources fund

The JPM Natural Resources fund is looking to increase its position in gold, following ongoing concern for oil and copper prices.

Run by Neil Gregson and his commodities team, the £760m fund is trying to position itself in a market with “appalling sentiment”.

Portfolio manger James Sutton says: “We will be looking to increase our position in gold from 17 per cent to around 20 to 25 per cent.”

Drastic falls in the price of copper, together with a tumbling oil price has meant there is little room for error in the positioning of the portfolio, although fund manager Gregson remains confident oil prices will recover towards the end of 2015.

This interesting gold-related article put in an appearance on the British website on Thursday sometime---and I thank Casey Research's own Jeff Clark for bringing it to our attention.

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Confederate gold treasure may be in Lake Michigan

Could there be roots to one of the Civil War's most enduring mysteries in Muskegon, Michigan? That's what two local treasure hunters strongly believe and they have four years of research that they feel proves it.

Kevin Dykstra and Frederick J. Monroe were diving in northern Lake Michigan in 2011 and found the remains of a shipwreck, they believe, could be "Le Griffon," which sank in 1679. The funny thing is, the pair weren't searching for shipwrecks at the time of their 2011 find.

They were searching for a much bigger treasure -- lost Confederate gold from the Civil War.

Both Kevin and Frederick have decided to go public with their research, which reveals that West Michigan could be home to this 150-year old mystery.

This very interesting article, filed from Muskegon, Michigan, was posted on the website sometime this year, but there's no dateline.  This is another story I found over at the Internet site yesterday.

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Canadian gold miners raising nearly $800 million as financing window opens

The financing window is open for Canadian gold miners, and they are rushing through it at a frantic pace before it shuts.

Six companies have announced bought deal offerings since Tuesday evening: Romarco Minerals Inc., Detour Gold Corp., Osisko Gold Royalties Ltd., Primero Mining Corp., Asanko Gold Inc., and Richmont Mines Corp. Between them, they are raising a whopping $789.8 million. Last week Yamana Gold Inc. unveiled a $260.2-million equity deal of its own, and Lydian International Ltd. tapped the market for $16.5 million.

The flood of financings coincides with a significant jump in the gold price that has reignited investor enthusiasm for the sector. Bullion is up almost 10 percent this month and topped US$1,300 an ounce on Wednesday for the first time since August.

This article appeared in Canada's National Post newspaper on Wednesday---and I found it on the Internet site yesterday.

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GATA's Bill Murphy and Ed Steer interviewed at Vancouver conference

GATA Chairman Bill Murphy and board member Ed Steer, interviewed by Vanessa Collette, discussed the prospects for the monetary metals last weekend at Cambridge House's Vancouver Resource Investment Conference.

The interview is 12 minutes long and can be seen at GoldSeek's companion site,  This interview, along with Chris Powell's introduction, was something I extracted from a GATA release yesterday.  It's worth watching, at least in my opinion.

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Turkey: gold in action

  • Turkey has a long tradition of gold demand; we expect this to continue. Turkey’s relationship with gold is underpinned by a deep cultural heritage. In the jewellery fabrication industry it is a medium of exchange and a unit of account: in the Grand Bazaar – the heart of Turkey’s gold market – rents are priced in gold. There is a strong economic incentive to own gold too. Generations of Turkish savers have turned to gold as an effective hedge against the ravages of inflation and currency weakness.
  • Its gold mining industry is small, but growing quickly. Turkey has an expanding gold mining industry with significant untapped potential. Gold production has increased in almost every year since 2001, growing from 2 tonnes to 33.5 tonnes in 2013. And this may be the tip of the iceberg: Turkey’s Ministry of Energy & Natural Resources estimate gold reserves to be 840 tonnes.
  • Gold’s value chain makes a significant contribution to Turkey’s economy. In 2012 alone, gold fabrication, consumption and recycling added at least US$3.8bn to Turkey’s economy. The value chain supports 5,000 gold fabricators, 35,000 retail outlets and employs about 250,000 people.

This brief, but interesting article put in an appearance on the World Gold Council Internet site [] on Thursday---and I thank Manitoba reader U.M. for her final contribution to today's column.

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India needs reforms to raise gold recycling, World Gold Council says

India needs to take a leaf out of Turkey's book, which has undertaken gold reforms that helped bring out "stocks under the pillow," to reduce imports and curb smuggling, the World Gold Council today said.

"This is the right time to bring in gold reforms in the country instead of putting on more curbs to curtail demand," the council's managing director for India, Somasundaram PR, said today, quoting the report, "Turkey: Gold In Action."

"This will help in bringing out 'stocks under the pillow' and hence increase recycling, which will help in reducing imports and smuggling," Somasundaram said.

Whenever the people of India hear the World Gold Council talking about mobilizing their privately owned gold, they should hang onto it even more tightly than they already are.  This is another story from the World Gold Council's website yesterday---and I found it embedded in another GATA release.

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'Conspiracy facts' discussed in Goldbroker's interview with GATA secretary Chris Powell's Dan Popescu has interviewed your secretary/treasurer about the refusal of mainstream news organizations and financial market leaders to examine and respond to the documentation of the longstanding Western central bank policy of gold price suppression. Also discussed in the interview are:

-- Attempts to discourage examination of the policy of gold price suppression by disparaging the issue as mere "conspiracy theory."

-- The "conspiracy facts" of secret meetings of government officials to develop and implement policies of secret intervention in the gold market.

-- The remarkable admission recently obtained by founder Fabrice Drouin Ristori from the Banque de France's director of market operations, Alexandre Gautier.

The interview is 17 minutes long and is another gold-related news item I found on the Internet site.

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Jan 22, 2015

Is Dollar Next? Investors Reassess After Swiss Shock: Currencies

After Switzerland shocked markets by scrapping its currency cap, investors are beginning to ask whether a policy surprise may be lurking for the dollar, too.

Samson Capital Advisors LLC said the Swiss move, which sent the franc surging as much as 41 percent against the euro last week, was “a good reminder” of the risks of following the herd, just as speculators pushed bets on a dollar rally to a new high. A shock from the Federal Reserve, such as raising interest rates less quickly than investors expect, may derail the greenback after it advanced to the highest in a decade, State Street Global Advisors Inc. warned.

“People have to be re-assessing what their positions are,” Jonathan Lewis, chief investment officer at New York-based Samson, which has $7.4 billion in assets, said by phone on Jan. 16. In the case of Switzerland, “people were betting billions of dollars on the kindness of strangers, people they’d never met, whose names they couldn’t pronounce.”

Bloomberg’s Dollar Spot Index -- which tracks the U.S. currency against the euro, yen and eight others -- is headed for a seventh straight monthly advance on the assumption the Fed will raise its zero to 0.25 percent benchmark rate in coming months. At the same time, traders expect Europe and Japan to debase their currencies by flooding markets with more cash.

This Bloomberg article, filed from New York, appeared on their Internet site at 6:41 a.m. Denver time yesterday morning---and I thank West Virginia reader Elliot Simon for today's first story.

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Shadow banking now poses top risk to U.S. stability, warns IMF

The U.S. shadow banking nexus is coming back to haunt like some hydra-headed beast and now poses the biggest potential threat to the American financial system, the International Monetary Fund has warned.

Zhu Min, the IMF's deputy chief, said regulators have successfully cleaned up much of the global banking system since the Lehman crisis, but the excesses have moved off books and are once again growing to disturbing proportions.

"The key risk has shifted to shadow banking," he said, speaking at the World Economic Forum in Davos.

While the explosion of China's shadow banking is well-known, Zhu Min said there has been a surge of lending by asset management funds and others non-bank players to U.S. companies. This is outside normal control and is hard to track.

This Ambrose Evans-Pritchard offering showed up on The Telegraph's web site at 4:25 p.m. GMT yesterday afternoon---and I thank South African reader B.V. for sending it along.

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New York says Barclays not cooperating in 'dark pool' probe

New York's top law enforcer on Wednesday accused Barclays Plc of defying his subpoenas in a probe of high-speed trading in its private "dark pool," and moved to expand his lawsuit accusing the British bank of fraud.

Barclays quickly fought back, accusing state Attorney General Eric Schneiderman of overreaching, and scrambling to fix a lawsuit that it said was fatally flawed to begin with.

In a proposed amended complaint, Schneiderman said Barclays has refused to let its top equities electronic trading executives, electronic trading chief William White and head of product development David Johnsen, answer his questions even though both have been subpoenaed.

This Reuters story, filed from New York, showed up on their website at 8:11 p.m. EST yesterday evening---and I thank Harry Grant for pointing it out to me just after midnight.

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Hedge Fund Manager Loses 99.8% In 9 Months, Tells Investors He Is "Sorry" For "Overzealousness"

A hedge fund manager told clients he is "truly sorry" for losing virtually all their money.

Owen Li, the founder of Canarsie Capital in New York, said Tuesday that he had lost all but $200,000 of the firm's capital—down from the roughly $100 million it ran as of late March 2014.

"I take responsibility for this terrible outcome," Li wrote in a letter to investors obtained by

"My only hope is that you understand that I acted in an attempt—however misguided—to generate higher returns for the fund and its investors. But even so, I acted overzealously, causing you devastating losses for which there is no excuse," he added.

This Zero Hedge piece showed up on their website at 1:59 p.m. EST on Wednesday afternoon---and I thank U.K. reader Ian Doherty for sliding it into my in-box in the wee hours of this morning.

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The Canadian Dollar is Going Crazy After the Bank of Canada Cuts Rates

Canada just joined the easing party — and now the Canadian dollar is going crazy.

The Bank of Canada just announced that it cut its main interest rate to 0.75% from 1%, joining the trend of central banks around the world trending toward easier monetary policy. 

Following the announcement, the Canadian dollar, also known as the loonie, weakened sharply against the U.S. dollar, to nearly 1.24 against the dollar. Earlier on Wednesday, the loonie was at around 1.206 against the dollar.

In its announcement, the Bank of Canada said the move to cut rates followed the sharp drop in the price of oil.

Regardless of the time stamped on this story from Wednesday, reader U.D. sent it around about 1:30 p.m. EST yesterday---and the chart is worth the trip.

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Low inflation worries prompt retreat from rate rise by Bank of England

Bank of England policymakers voted unanimously to keep rates on hold in January, in a surprise about-turn for the two dissenters Martin Weale and Ian McCafferty.

All nine members of the bank's monetary policy committee voted to hold rates at 0.5 percent.

The vote signalled a change of heart from the committee's two main hawks -- Martin Weale and Ian McCafferty -- who have been pushing for a rate rise since August.

Minutes from the meeting on January 8 showed that the pair's decision to stop voting for a rate rise was driven by concerns that a rise in interest rates would increase the risk of prolonged low inflation.

This news item appeared on the Internet site at 9:45 a.m. GMT yesterday morning---and I found it on the Internet site.

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S&P Surges as ECB's Q.E. Leaked: Board Proposes €50 Billion in Bond Monetization Per Month

And so with less than 24 hours to go, the ECB has decided to leak its deliberations not only to Merkel and Hollande, but Dow Jones. To wit:


More as we see it, but if indeed this will be a program without risk-mutualization and conditional and limited burden-sharing, where the hope was that Draghi would "shock and awe" the world with the size of the bond purchasing program instead, €600 billion per year looks decidedly on the low side of any "surprise" announcement where the whisper number was for €1 trillion per year, and if indeed this is the final formulation may result in a substantial disappointment for stocks after the initial knee-jerk reaction.

This Zero Hedge story from 11:18 a.m. Wednesday morning may, or may not, be worth reading, depending on the news out of Europe this morning---and my thanks goes out out to reader M.A. for sending it our way.  There was a Reuters story from Tuesday in a similar vein---and it's headlined "Quantitative easing in euro zone requires shared risk".  I thank Doug Milne for finding it for us.

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Swiss cabinet stalls to tackle currency shock fallout

The government says it is willing to launch an economic stimulus package to prevent the Swiss economy from falling into recession. But it has stopped short of taking short-term measures to soften the impact of the strong Swiss currency.

“The situation is very difficult,” conceded Economics Minister Johann Schneider-Ammann following Wednesday’s regular cabinet meeting. “But there is no need to intervene at this stage,” he added, dismissing calls by the political left.

The government pledged to analyse developments, as production costs for the industry rose considerably as a result of a decision by the central bank last week to lift the minimum CHF1.20 exchange rate per euro.

He said the cabinet was closely watching the European Central Bank’s monetary policy to increase the money supply and its impact on the Swiss currency and developments.

This story was posted on the website at 2:25 p.m. Europe time yesterday afternoon---and I thank reader B.V. for his second offering in today's column.

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Central bankers lurch from 'whatever it takes' to 'whatever next'

The Swiss currency shock has raised an awkward question many investors have been fearful of asking - what if central banks become as unpredictable and fallible as they are powerful?

The Swiss National Bank's sudden decision to abandon its three-year-old cap on the franc - the "cornerstone" of its monetary policy just three days before - led to the biggest one-day move in major exchange rates in the post-1973 floating rates era. To some it was a warning sign of other U-turns, mishaps and possible failures by central banks still ahead, outcomes not fully appreciated by long-becalmed markets.

For decades the power of currency printing presses has held markets in thrall. "Don't fight the Fed" and all its international variations has been a devout belief among financial traders.

Even after the failure of Alan Greenspan's Federal Reserve to spot and head off one of the biggest credit booms and busts in history, the ability of the Fed, Bank of England, Bank of Japan, European Central Bank and others to flood their money supply to ease the fallout helped anaesthetise fractious markets.

Last week's thunderbolt from the Swiss authorities went further by calling into question whether central banks are as committed to their policies as they purport to be.

Jim Rickards turned out to be 100 percent correct.  Central banks, including the Fed, don't know what the hell they're doing.  They're making this up as they go along.  This Reuters news item, filed from London, put in an appearance on their website at 1:54 a.m. EST on Wednesday morning---and I thank reader Doug Milne for his second contribution to today's column.  It's worth reading.

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1,700 Private Jets Fly to Davos to Discuss Global Warming

A squadron of 1,700 private jets are rumbling into Davos, Switzerland, this week to discuss global warming and other issues as the annual World Economic Forum gets underway.

The influx of private jets is so great, the Swiss Armed Forces has been forced to open up a military air base for the first time ever to absorb all the super rich flying their private jets into the event, reports Newsweek.

“Decision-makers meeting in Davos must focus on ways to reduce climate risk while building more efficient, cleaner, and lower-carbon economies,” former Mexican president Felipe Calderon told USA Today.

Davos, which has become a playground of sorts for the global elite, is expected to feature at least 40 heads of state and 2,500 top business executives. Former Vice President-turned-carbon billionaire Al Gore and rapper Pharrell Williams will be there as well; each plans to discuss global warming and recycling respectively.

This very interesting article appeared on the Internet site on Tuesday---and it's courtesy of Casey Research's own Jeff Clark.

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Party Hasn't Stopped for Russians at Davos Even With Ukraine Sanctions

VTB Bank isn’t letting a bad year get in the way of a good party.

Executives at the state-controlled Russian bank, which has cut hundreds of employees following U.S. and European Union sanctions, are betting a little jazz and vodka with the world’s elite will dull the pain. VTB threw a soiree Tuesday at the World Economic Forum in Davos, Switzerland, where guests were treated to what an invitation sent to delegates called a “modern Russian atmosphere” at the ski town’s InterContinental Hotel.

Party goers were greeted by women in conical, gold-flecked outfits with strips of neon-LED lights wrapped around them, served caviar, and serenaded by Grammy-winning guitarist Al Di Meola, Russian crooner Leonid Agutin and Serbian star Emir Kusturica and his No Smoking Orchestra.

“As a strategic partner of the World Economic Forum in Davos, we have organized a reception dedicated to its opening ceremony,” the VTB press office said in a statement.

This Bloomberg article is worth your while, if you have the time---and if the subject interests you.  It was filed from Davos---and appeared on their website at 11:46 a.m. MST yesterday morning---and I thank Elliot Simon for sharing it with us.

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Serbian central bank to discuss Swiss franc loan pain with bankers, borrowers

Serbia's central bank plans to meet representatives of banks and borrowers next week to discuss the impact of a surge in the value of the Swiss franc, widely used in the region for home loans.

On Tuesday, Serbian Finance Minister Dusan Vujovic said banks were looking at possibly extending the term of the loans, partially converting them into euros, or lowering interest rates.

Some 22,000 loans worth around 1.1 billion euros have been issued in Serbia denominated in Swiss francs, 8.5 percent of the value of all lending in foreign currencies.

Mortgage installments have shot up for hundreds of thousands of homeowners in central and eastern Europe since the Swiss National Bank took the surprise decision last week to scrap its cap on the value of the franc.

This Reuters news item, filed from Belgrade, showed up on their Internet site at 2:25 p.m. GMT on Wednesday afternoon---and I thank reader U.M. for her second offering in today's column.  A similar story from Poland was posted on the website on Tuesday---and it's headlined "Thousands of Poles hit by Swiss franc decision".  It's the first story of the day from Roy Stephens.

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Poroshenko's Emergency Return to Kiev

Poroshenko hastily ended his three-day visit to Switzerland and returned to Ukraine on the day Davos forum opened. Ukraine’s leader hoped for political and economic successes, but received only frustration.

The failed Ukrainian offensive against Donetsk and the barbaric Ukrainian methods that had become obvious even to Europeans who used to sympathize with Ukraine, made Poroshenko’s meeting with the financial and political elite of Europe and the world senseless.

It was a painful blow to Kiev to hear the information revealed by DPR Prime Minister Zakharchenko concerning Ukrainian army casualties. Only during the night from Tuesday to Wednesday it lost 40 killed, or ten times more than the “standard” casualty reports provided by CTO press service. The tales told by captured “cyborgs” about how their command sent them to slaughter caused a painful bursting of the bubble in which many war-minded Ukrainians lived, judging by their emotional reactions in social networks.

This interesting article was posted on the website yesterday sometime---and it's the second contribution in a row from Roy Stephens.  It's worth skimming.

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Ukraine conflict: U.S. accuses rebels of 'land grab'

U.S. Secretary of State John Kerry has accused pro-Russian separatists in east Ukraine of a "blatant land grab".

He was speaking after reports that the rebels had extended the area they control, violating a ceasefire plan.

Ukraine says Russia has more than 9,000 soldiers fighting alongside the rebels, a claim it denies.

Meanwhile, foreign ministers from Ukraine, Russia, France and Germany issued a joint call to end the fighting, following talks in Berlin.

This BBC news item appeared on their Internet site at 7:07 p.m. EST on Wednesday evening---and it's definitely worth reading, especially if you read the prior article about Poroshenko's emergency return to the Ukraine yesterday.  Not surprisingly, it's another story from Roy Stephens.

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Orban-Putin summit to test meaning of E.U. sanctions

Hungary’s Viktor Orban will host Russian leader Vladimir Putin in Budapest next month despite an E.U. decision to “not hold bilateral regular summits”.

The Hungarian foreign minister, Peter Szijjarto, announced the visit, to take place on 17 February, on Hungarian radio on Wednesday.

"We will have bilateral and geopolitical issues on the agenda, including the energy security of central Europe. Energy issues have become more urgent with the shelving of the South Stream pipeline”, he said.

Ukraine will be on the agenda too”, he added.

This news story, filed from Brussels, showed up on the Internet site at 5:03 p.m. Europe time on Wednesday afternoon---and once again I thank Roy Stephens for bringing it to our attention.

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Russia hits back at Obama over State of Union speech

Russia hit back on Wednesday at U.S. President Barack Obama's State of the Union speech, saying it showed the United States believes it is "number one" and seeks world domination.

Obama said his country was upholding "the principle that bigger nations can't bully the small" by opposing what he called Russian aggression and supporting democracy in Ukraine, and that Russia was isolated.

"The Americans have taken the course of confrontation and do not assess their own steps critically at all," Russian Foreign Minister Sergei Lavrov told a news conference.

"Yesterday's speech by President Obama shows that at the centre of the (U.S.) philosophy is only one thing: 'We are number one and everyone else has to recognise that' ... It shows that the United States wants all the same to dominate the world and not merely be first among equals."

This Reuters article, filed from Moscow, appeared on their Internet site at 7:38 a.m. EST yesterday morning---and it's another contribution from Doug Milne.  There was a Russia Today story about this yesterday as well---and it was headlined "‘What a dreamer!’ Rogozin ridicules Obama claim of Russian economy in ruins".  It's courtesy of Roy Stephens.

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Swiss National Bank inks pact for renminbi clearing with PBOC

Switzerland's central bank said on Wednesday it had agreed with the People's Bank of China (PBOC) to establish clearing arrangements in Switzerland for renminbi trading and extend a pilot scheme for clients of Swiss banks.

"It (the arrangement) will promote the use of the renminbi by enterprises and financial institutions in cross-border transactions, and promote facilitation of bilateral trade and investment," the Swiss National Bank said in a statement.

Alongside the pact, the PBOC will extend a pilot scheme for foreign investors to clients of Swiss banks, with a quota of up to 50 billion yuan ($8 billion).

"We are willing to make Switzerland one of the centers of offshore RMB business," Chinese Premier Li Keqiang told the World Economic Forum.

This Reuters piece, co-filed from Davos and Zurich, showed up on their website at 2:31 p.m. EST yesterday afternoon---and it's the final offering of the day from Doug Milne, for which I thank him.

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Venezuela and China close $20 billion deal

President Maduro of Venezuela has recently been on a visit to China where he attended the 1st Forum China-CELAC - New directions in the relations of Venezuela and China have been opened by the recent visit to Beijing of President Nicolas Maduro, which resulted in a $ 20 billion funding for economic projects, in the areas of the energy industry and social programs.

Maduro said that, as part of the agreements, the Asian giant will increase its participation in the projects of the Orinoco Hugo Chavez oil belt, where the largest crude reserve in the world is situated. According to official sources, the funding mechanisms between the two countries amount to over US $ 50 billion through 256 programs.

China is the main investor in Venezuela and is its second client in terms of oil after the United States, with a volume of 640 thousand barrels per day, according to statistics.

This news item put in an appearance on the Internet site back on January 14---and it's courtesy of reader M.A.

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Chile regulator says could cancel permit for Barrick's Pascua-Lama

Chile's environmental regulator is re-evaluating penalties on Barrick Gold Corp's Pascua-Lama project, a process that could include cancelling the embattled mine's permit, the head of the government body told a local daily newspaper.

"The new sanction can fall anywhere on the spectrum allowed by the law, which goes from a warning to revoking the environmental permit, including fines," Cristian Franz, head of the SMA, said in an interview published on Wednesday in Diario Financiero.

"I can say that I don't rule out any scenario," Franz added.

Chile's environmental regulator, known as the SMA, fined Barrick $16-million in May 2013 for not complying with some of the country's environmental requirements for its massive gold and silver project.

This very interesting gold-related news item was posted on the website yesterday sometime---and it's the final offering of the day from South African reader B.V.

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Gold CEO captured on bus in $970m laundering case

A manhunt for the chief executive officer of CI Goldex SA has ended after police captured John Hernandez on a public bus last night, according to Colombia’s Attorney General’s office.

“He was captured while traveling with his wife in the province of Quindio,” Luz Angela Bahamon, a public prosecutor who headed the investigation, said in a telephone interview last night.

The AG’s office alleges that Goldex is at the center of a $970 million money-laundering scheme, the biggest in the country’s history. Colombia’s cocaine traffickers, Marxist guerrillas and others launder about $10 billion a year, equivalent to about 3 percent of gross domestic product, according to the government’s financial intelligence unit.

Colombian authorities spent three years investigating Goldex, once the nation’s second-biggest gold exporter. In a September interview from his fortified gold foundry in Medellin, Hernandez said he had done nothing wrong.

This Bloomberg news item put in an appearance on the Internet site yesterday morning sometime, despite what the dateline says.  I thank reader U.M. for sending it.

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India gold bar imports nearly halved in Dec 2014

The Gems and Jewellery Export Promotion Council (GJEPC) has released the details of imports of raw materials for gems and jewellery for the month of December last year. According to data, the gold bar imports by the country during December 2014 witnessed a sharp decline of nearly 47% over the previous year.

The monthly import statistics released by GJEPC suggests that the total gold bar imports by the country during December ‘14 amounted to Rs 1,282.07 crores (USD 204.31 Million).In rupee terms, the gold bar imports have plunged by 47.13% over the year. The decline in dollar terms stood at 47.84%. It must be noted that the country’s gold bar imports during December 2013 were Rs 2,425.10 crores (USD 39.71 Million).

According to GJEPC, the cumulative gold bar imports by the country during the initial nine months of the current fiscal from April ‘14 to December ‘14 jumped higher by 12.97% when compared with the corresponding nine-month period during previous fiscal year. The country’s gold bar imports during April to December 2014 totaled Rs 25,875.32 crores (USD 4,266.10 Million). During the similar period last fiscal, the country had imported gold bars worth Rs 22,904.86 crores (USD 3,852.45 Million).

The real reason that December imports declined in India was because of the huge 100 tonnes that was imported in November, which turned out to me more than required---as the bullion buyers were somewhat afraid that import quotas would be reapplied quickly---and when that turned out not to be the case, they cut their purchases in December accordingly.  This brief article, filed from Mumbai, appeared on the Internet site  at 1:46 a.m. GMT yesterday morning---and I thank reader U.M. for digging it up for us.

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Indian gold discounts widest in 17 months, anticipates duty cut

Indian gold importers are offering a discount of up to $16 an ounce versus London prices, the widest in 17 months, as jewellers curtail purchases ahead of a possible cut in the import duty.

India, which vies with China as the world’s top gold consumer, raised import taxes on the metal to 10% in a series of hikes to August 2013 as policymakers scrambled to narrow a gaping current account deficit and arrest a free fall in the currency.

Now a falling trade deficit has stoked expectations the government will cut the import duty in the budget to be presented on 28 February.

This news item, filed from Mumbai, showed up on their website at 8:10 p.m. EST on their Wednesday evening---and once again I thank reader U.M. for bringing it to our attention.  It's worth reading.

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Royal Mint sells gold bars directly for the first time

The bars, which were last produced by Royal Mint 47 years ago, are available to buy in several weights ranging from 1g to 100g.

Each bar bears the historic marque of the Royal Mint Refinery “RMR”.

The price of the bars fluctuates as it is linked to the constantly changing price of gold and silver. Currently, a 100g bar made of 999.9 gold costs £2,871.39 while a 1g gold bar costs £49.65.

For years the Royal Mint has sold collectible coins commemorating special events direct to the public. Last year it began selling "bullion" coins made for investment purposes to the public – such as Sovereigns, Britannias or Lunars.

This interesting story appeared on The Telegraph's website at 2:05 p.m. GMT yesterday afternoon local time---and it's the final offering of the day from Manitoba reader U.M.---and I thank her on your behalf

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